tv Squawk on the Street CNBC February 18, 2010 9:00am-11:00am EST
i don't know. that seems like a crazy thing. >> a bit of a stretch. >> a bit of a stretch. >> though some people are a little perturbed he's doing it during a golf tournament sponsored by accenture, which dropped him. but i don't know. you know, i don't know. whenever he does it he's going to steal the spotlight from anyone. >> yes. >> let's hit the markets. we start with mary thompson here at the big board. mary? >> good morning, mark. as you mentioned of course the futures are being pressured today by the economic data released earlier today and those results from walmart. some actually positive guidance from other companies. we'll get to that a little later. in the wake of today's data we saw the producer price index rise higher than expected, 1.4%, the biggest month over month gain since october of 2008. we have the dollar trading at a seven-month high and that is putting pressure on commodities this morning. walmart under pressure as well down about 2% in the premarket. its fiscal fourth quarter
results better than expected at a nickel at $1.17 a share. guidance for the first quarter of 81 to 85 cents a share disappointing because analysts were looking for 85 cents a share. another company with disappointing guidance, the rent a car company avis budget is down 8% in the premarket. while the company's loss for the last quarter narrowed more than expected to 25 cents a share the company is expecting lower volumes in the first quarter, so that's putting pressure on that stock today. on the other hand, after the bell we did receive more positive news from the tech sector from hewlett-packard with better than expected results. the company also raising its guidance for the full year. we'll see how that dow component affects trade today. now let's get a check on the rest of the tech sector. for that we go to bertha coombs at the nasdaq. >> thanks, mary. we get a trio of positive reports after the close yesterday from tech titans as well but this morning they're all trading to the down side. let's start off with applied materials. despite the fact that it did beat and boost this morning it's up about off about 1.5%. the nasdaq set to open a little
lower after grinding higher four sessions in a row. nvidia also off as well down 5.5% after it posted better than expected earnings. network appliance this morning off about 1%, a couple downgrades, these shares have been on a tear but again pretty good guidance. we'll hear from dell after the close this afternoon. and the folks over at the "new york post" are saying we may hear from the justice department any day now within the next 30 days approving the deals between microsoft and yahoo. one more, xenaport cut to sell after its restless leg syndrome drug was rejected by the fda. back to the nymex and sharon. >> reporter: whether you're talking grains or metals or energy we're looking at lower prices across board in commodities due to the strength that we're seeing right now in the dollar versus the euro. look at the dollar right now. rising to near a nine-month high against the euro and that is impacting not only what we're seeing here at the nymex but for
commodities across the board. we're looking at gold that has taken a pretty big hit, particularly overnight after we got that news from the international monetary fund that they are going to continue the gold sales but they started last year, 191 tons of gold that they're going to plan to sell shortly and that has presented some uncertainty about exactly when that will happen and how that will take place on the open market. but the details of that have pressured gold prices. meanwhile in the energy market we continue to look at pressure here particularly on the distallate rise we got, that surprise bill from api yesterday is the weakest part of the energy complex right now and we are also waiting for that energy department report. that will be out at 11:00 a.m. eastern time. i'll have that live. natural gas comes out at 10:30. rick santelli, to you in chicago. >> thanks, sharon. we're all still kind of smarting from the much hotter inflation data. a jump in claims. but if you look at the fixed income markets, they're virtually unaffected by today's activity at all. there's a lot of dynamics going on of course, whether it's do
you believe the fed's words versus their actions with regard to the future e. it strategy, or what's going on in europe or what's going on in dubai? but the foreign exchange side is looming large. the dollar is just on a tear this morning against the euro, particularly in the dollar index improving marginally by a fifth of a krenlt. i always bring you the nonseasonally adjusted data. 31 k jumped in initial claims, it was an equal drop about minus 30,000. nonseasonally adjusted continuing claims down about 150,000. and if you look at maybe the most important category, those unemployment emergency unemployment compensation categories which include several tiers not on the same time line but nonetheless that was one fly in the ointment, up a little over 300,000. erin, back to you. >> thank you very much, rick santelli. we had a pullback in asia overnight. the nikkei was lower. the nikkei was the only one that bucked the trend, a little bit higher. hang seng, south korea, and the australian index also trading lower. we should emphasize again that
china has been closed and will remain closed all week. and the week's almost over. guy johnson is live in london to show us what's happening across the pond. good morning. >> reporter: good morning you to, erin. we're seeing a bit of a drop on our side of the pond. it really has been driven by the data from your side of the pond. let me show you what's happening with the stoxx 600. this is the move we've seen over the last few minutes. the timing is spot on so that is the move we're seeing over here. looking for an indication on the open there. let me show you one of the big stories we're watching quite carefully. that is what is happening with daimler, mercedes effectively to you and i. this company is down hard today, the shares taking a big knock after it cut its dividend, the '09 numbers really didn't live up to expectations. the move lower was very sharp earlier on. i just got off the line with the ceo of the business and he said quite categorically to me that he thought this was a big over reaction by the markets. hard to tell whether it is but,
certainly, got pretty spooked, the market, by what we heard from the company today. the outlook for 2010 a little unclear as well. mark haines, over to you. >> thank you very much, guy johnson. i'm on the floor with the one and only walter j. dowd, ceo, warren meyers, also an official cnbc contributor. >> i am. >> got the decoder ring. >> and the decals and everything. >> on your car. okay. what's going won this market? we seem to have rallied back. >> we had a couple good days in a row which i think is a little impressive. as we talked last week i said i was expecting a lot more volatility. we saw that for a few days but then had a nice little pop on the up side. you know, earnings season is just about winding down. they've all beat the comps handily which was expected but i think now looking forward things are a little bit dicey again and i think again you'll see some volatility going forward. now the earnings season is over and we look at the economic data over the next month or so. >> you don't sound enthusiastic.
>> it's not that i'm not enthusiastic but i look forward to volatility. you need some in the market. it's a noble trading kind of environment where you get lots of back and forth and excitement. i think that's what we all miss and those lazy days where you don't have that really gets kind of boring down here. >> good for you. volatility. but, you know, for the average investor is the trend up or down? >> well, you asked me that last week. i said i thought it would be slightly down because of the uncertainty out there. most of the uncertainty is still there. the greece situation is maybe improved a speck. beyond that, though, i think i'm going to still say down even though the last few days are showing we're going up. >> all right. warren meyers, thank you very much. have a great day. >> thank you, mark. >> warren meyers from walter j. dowd. coming up the faber report. and what else, erin? >> all right. coming up also we got part of the house pricing problem. everyone still thinks their neighbor's house is worth less than theirs. especially when you're going to sell. so are people going to snap out of their delusions?
and would that help the market at all? we've got some surprises ahead plus our own poll question today. a british think tank says cutting the work week to 21 hours could help boost the economy. would you be willing to work less? that would mean you would earn less. you'd only earn for your 21 hours of work if that did help the greater economy. yes or no? [ male announcer ] right now mrs. jones is freeing herself from restrictive calling circles and switching her entire family to sprint. that way her daughter isn't, like, limited to, like, lame calling plans. her son can talk all day long. and while on the sprint network, if her husband pocket-dials any mobile phone nationwide... yo, this is flavor flav! who's this?! [ male announcer ] ...it's no big deal. welcome to the now network. get any mobile anytime for just $42.50 a month per person with unlimited text and data. and get a phone upgrade every year plus other exclusive rewards. deaf, hard-of-hearing and people with speech disabilities, access www.sprintrelay.com.
welcome back. wanted to start off this morning with a look at some earnings because we've got a number of them that are potentially going to move some stocks. starting with one of my all time favorites, directv. we don't talk that much about directv of course. it has over 18 million subscribers in the u.s., one the bigger players in delivering video to so many people's homes. but we'll see how the stock does today. while the company did report growth in subscribers it may not have been quite as much as people were hoping for. that number coming in at 118 -- 119 net subscriber additions and expectations had perhaps been for directv a bit higher in terms of net subscriber
additions. that being said, larger buyback than anticipated so that could have a positive impact on the stock. don't know if we have it for you or a bid/ask. average monthly subscriber return was also up to 1.52% as you take a look at shares of directv again looking, well, kind of right around where the current stock price is. we'll see how directv ends up. of course, this is now no longer a controlled company. yes, john malone owns a lot of it but it is no longer controlled in that sense after, of course, moving from newscorp to liberty and now once again if you will on its own. a new ceo at direct always the subject of a lot of takeover talk. yesterday the shares up over 2% on more of the same. i can tell you at least as far as i've been able to determine there is nothing going on with respect to directv and any sort of a takeover or anything from at&t and the like. doesn't mean those rumors won't
recur many times and at some point perhaps will be true. but there's look at directv. we'll see how the stock again performs today especially after that move up yesterday and this, what i'm being told is a somewhat light subscriber addition number. we're also seeing weakness this morning in a couple of the gaming stocks after reports last night from las vegas sands and just a few moments ago from mgm mirage, those shares looking down as much as 5% on the fourth quarter loss that the company reported. of course, both of these companies have gotten their financial houses in order over the last year in a significant way. take a look at mgm shares though. they will be down it would appear at the opening bell and las vegas sands, i don't know if we have that for you, also. there's a look at mgm mirage, again, both of these companies have come a long way, las vegas sands consolidated fourth quarter adjusted property what they call ebitdar was up 25.5%. but net revenue for the fourth
quarter 1.82 billion also up 17.5% there. we'll keep an eye on both of those stocks, gaming, casino, whatever you want to call them especially in light of those numbers from mgm mirage not getting a great reception at least initially. all right. another speed bump for toyota this morning. the national highway traffic safety administration announcing it is launching a formal probe into steering problems for the carmaker's popular corolla. automotive reporter phil lebeau has more. phil? >> hi, david. corolla is the best selling car in the world and now it is under investigation with nhtsa, the national highway traffic safety administration. how many carts are we talking about? if you look at the investigation it's looking at power steering not being responsive. we've checked the website at nhtsa and there have been 156 complaints but the breakdown roughly 500,000 between 2009 and 2010 corollas are under investigation by nhtsa now. how is this going to play at dealerships around the country and particularly in the biggest market for toyota, california?
it certainly isn't going to help things but the company isn't standing still. the company is using pr firms to get out a positive message as much as possible given the negative news reports out there. the firms are also like many around the country using incentives to attract buyers and going further in terms of repairing vehicles that have been recalled. >> as soon as this recall was launched we decided to open our service department 24 hours a day seven days a week. we've done that from the get-go and we're expanding that to all the recalls and now starting to do mobile service where we'll go out to our consumers' home or office and do the repair right on the spot how big is california for toyota? it is huge, the largest market in the country, just over 15% of its sales. you always hear people talk about the smile. if you look at a map of the united states, well it stretches from california down south through texas, florida, and then up to new york. those are the strongest markets for toyota. throughout the day we'll have more regarding how the dealers
in california are dealing with what's really been an ongoing crisis. so this is one of those stories, guys. we say it all the time. it seems like every day is a new headline and out in california they're trying to counteract that by hiring pr firms. back to you. >> thank you very much, phil lebeau. coming up, inside the numbers from hewlett-packard. hp poised to open higher. they posted a 25% jump in profits. while everyone was out buying computers, though, they apparently were not shopping at walmart. same store sales fell in walmart and the forecast is even weaker than had been anticipated. so taken together, what does this mean? are consumers really weak or are they actually moving up the price chain away from walmart? we'll talk about that, coming up.
all right. as we count you down to the opening bell futures right now are looking a little weak. we do get a break here even though we're down 4.70. we closed 1.89 above fair value so we got to add the two negatives and you wind up with something about less than three points below fair value. here's where the minis are trading right now. pretty consistent with that and we will open lower but not by much. >> look at your mini donuts. less than ten minutes to the opening bell we can see shares of hewlett-packard indicated to, well, you know what, mark, what's been going on lately with the widespread between the bid and the z? >> it's that way until we get closer to the open then the bid/ask narrows. there you go. >> okay. there you go. it was a little update button hit.
>> those ticks are bogus. >> bogus on the obviously on the bid. >> the real bid/ask is right around 50. >> so the ask is closer to the real price than the bid. dow component's first quarter came in better than expected. it also boosted the full-year outlook. corporate tech spending is expected to rise in the year ahead. let's check in with our guest. rob, i'm having trouble speaking today. so let's just talk about dell. came out with the numbers. and what are you seeing in their outlook for this year? they boost the forecast. is that because of -- they already have orders in the pipeline from companies or are these anticipated orders from companies? >> i presume you mean hp's numbers that were reported. dell is not until tonight. >> i'm sorry. i meant hp. dell is tonight. >> hp's numbers have been getting modestly better the past couple quarters and this was the first quarter where they really started to grow again. and i think it reflects the fact that i.t. spending is just improving and within that i
think the pc market in particular is really coming in outright strong. pcs drove the majority of the upside. i think pcs will continue to drive more than half of hps growth this whole year. >> and what about the consumer? are you seeing people buying more, trading up to higher price products, or no? >> yeah. i mean, consumer actually if you look back even in 2009 which was a pretty miserable tech year, consumer spending was actually pretty good in pcs and i think it was driven by low pricing. i mean, prices came down a lot last year. i think it got people to go out and buy a new pc, consumer con tin continued to be the faster growing of hp's businessness the quarter. corporate has also now started to actually grow again and i think that's really the most positive sign hopefully looking forward. >> dell is reporting today. what should we expect? >> right. so with dell, they are primarily corporate. i do think you'll see their numbers start to improve as
well. they're not gaining share the way hp is so they won't show the kind of upside hp was able to but i do think you'll see that dell's corporate pc sales are starting to rebound here as well. >> all right. so would you buy it? either one of them? >> i wouldn't be in a big rush to buy either only because there are other stocks i prefer, i prefer apple more, their growth, and i prefer ibm more. but i do think those stocks can actually move up. i think dell could be good as a trade. i think dell does have longer term issues, you know, if they can stop losing share but both stocks are actually pretty inexpensive here and i think tech spending is getting better so i think they go higher and not lower. >> thank you very much. we appreciate it. >> thank you very much. okay. final countdown to the opening bell just on the other side of this commercial break. >> oh, ho. and somebody interesting is ringing the bell today. >> oh, yeah. >> somebody with a bit of hair. a lot of hair all over their body.
you are watching cnbc "squawk on the street" live from the financial capital of the world. the opening bell is going to ring in three minutes. in the headlines at this hour u.s. jobless claims, unexpectedly jumped last week by 31,000. 473,000. hewlett-packard 25% jump in profits. walmart, 2% drop in same store sales. kind of a disappointment. >> as we count you down to the opening bells let us bring in the managing director at wells fargo and larry levin president of trading advantage. always good to have both of you. >> good morning. >> hi. >> walmart hurting the market a little. economic data not so exciting. what happens today, brian? >> you got a digestive tone both here and abroad and i think it's part and parcel of what's been going on. the economic data has generally been better than negative. that being said though the situation with china starting to reel in monetary fiscal policies, what's going on in the u.s., and the greece situation, is just bringing basically some backing and filling into the
marketplace. i think it's probably going to be a healthy thing over the long term though somewhat tenuous near term. >> larry, what's your point of view? also, if you could weigh in on this issue that we're seeing with the lack of ipos and high yield financing? >> i think the lack of ipos, companies are afraid, very worried we're sitting at these top levels and there is a lot of room on the down side. the only thing i would say is the market doesn't agree with that. regardless of economic data and how the economy is doing seems to continue to want to go higher. we may have a little room on the down side today and maybe tomorrow down to maybe 10.75 in the s&ps with these bad numbers but that's about it. i think back up, again, this market does not agree with what the economy is doing. the market wants to go up. the economy so-so at best. they don't really connect. >> right. although usually, i mean, conventional wisdom is when there is disagreement between stocks and bonds, bonds are ripe. bonds are clearly worried. are they wrong this time around? >> there is a lot of government intervention.
this time is a little different as far as the way you look at trading the stock market, bonds. there's just too much of that. doesn't let these markets be free anymore. they really are controlled. things you would have asked a year or two years ago really have different answers and are not connected anymore. >> bryan, any main headline we're looking for today. >> i think looking at the philly fed numbers coming out, a strong number out of the empire manufacturing index will be a focal point today and the leading economic indicator at 10:00 as well is another one we're keeping an eye on. >> thank you very much. we appreciate it. bryan, larry, and, mark, look. your bells are getting ready. you see everybody right above february 18th, there is a man holding a very hairy beast. >> it's sadie. >> do you know sadie won the westminister dog show. >> that's right. >> cindy adams in "the new york post" spoke to sadie's owners who own a hotel on macinac island. what she got when she won the prize was a hot dog. she loves hot dogs.
this is her third try. last year i think she lost because she had a little bathroom incident. >> well, sadie is a 5-year-old scottish terrier, and her full name is champion round town mercedes of mary scott. >> what? >> that's her registered name. winner of the 134th westminister. at the nasdaq, first financial northwest. >> it's a weird name. that's all. >> no it's not. they all have names like that. >> sadie sounds good enough to me. okay? >> i had a champion once. >> you did? >> yeah. west island terrier. >> and you went in the westminister dog show. >> no, no, not at westminister. you earn a championship for your dog by going to a bunch of dog shows and earning points and etcetera and i had a west championship. i can't for the life of me remember what his official name
was. we called him chet. >> you can't remember his official name. mark going to dog shows. that is a -- i learn something new every day. >> used to do that. >> all right. well, our market reporters are standing by, down six for the dow. let's start with mary and sadie. >> hello, erin. we have very modest losses this morning after disappointing data on the wholesale front, wholesale prices rising much more than expected in the month of january. also jobless claims and unexpected increase there weighing on the markets as well as a disappointing outlook for walmart. nevertheless in early trade the dow is only down eight points and the s&p modestly lower as well in early trade down about a point and a quarter. what we are also seeing is that the disappointing data that we received today is actually giving a lift to the dollar and that's keeping pressure on the commodities as well today. something we'll be watching. let's talk about walmart because it was indicated to open lower, about 53.25 after closing at 54 yesterday. the company's fiscal fourth quarter earnings beat by a nickel. however, its first quarter outlook was disappointing, 81 to
85 cents a share. analysts were looking for 85. disappointing same store sales numbers as well from the retailer so it's expected to keep some pressure on the dow today. hewlett-packard another dow component a different story and a story we've heard continually from the tech sector today or in this earnings season. the company beat the street in the first quarter and also raised its guidance for the full year. tech companies really come out with some very strong numbers and some of the best guidance that we have seen so far this earnings season. keeping with that theme we had analog devices, a chip maker coming out with stronger than expected first quarter results and raising its second quarter outlook, so, again, a mixed picture as far as outlooks go from the companies that have been reporting where overall the earnings have been better than expected. the dow is off five points. now let's check on the nasdaq. for that we go to bertha coombs. >> i'm going to continue that theme and in essence tech earnings have been like rodney dangerfield, great, yet they haven't gotten the respect and the boost you would think following those numbers. dell is up tonight obviously the pressure now even harder on dell
after hp's results. hp this morning is up right now about 0.7%. dell is flat. we're looking for 27 cents on 13.85 billion. network appliance did beat and they boost but they got a couple downgrades this morning. basically seeing valuation being met here and margins starting to be a little stretched. applied materials, the chips this morning under pressure. applied materials, again, beat and boosted, off about 2.5% as is nvidia off 7%. street not as excited about their boost there. priceline is one of the ones getting a little respect following its earnings. it saw international growth really spark its growth. international bookings were up 7% -- 70%. finally, xenoport down after its restless leg syndrome drug was rejected by the fda. a lot of volatility in the oil trade. the dollar index is now basically turned flat and we are
looking at oil prices that rally. looking like that we'll try to get to $79 a barrel. we're off those highs right now around $78 but it's been a huge move here in a tight range but interesting volatility here just in the last few minutes. we are also looking at gasoline helping to support prices here. we're waiting for that energy department report to come out at 11:00 a.m. for inventories but it's interesting that gasoline has continued to support food prices even as mastercard came out yesterday saying that gasoline demand was down 2.5% for the week, in fact the lowest level since october of 2008. we're also paying close attention to what has happened in natural gas because at 10:30 we'll get that report on natural gas storage levels. it's supposed to be a withdrawal that's bigger than historical average but that may have already in some ways been priced in due to the big storms we've seen, a lot of folks anticipating that would happen. rick santelli, to in chicago watching that dollar. >> well, i tell you, sharon, everybody here including wolfman is watching how much oil jumped on the two-minute chart around
28 to 30 after. just unbelievable volatility. what's really fascinating is it didn't seem to be at least at that moment in time dollar based. the dollar index actually had some of its gains and is still up slightly on the day. you can now see the euro currencies back over 136 after moving down below that significant level. interest rates have crept up but we're still virtually in an unchanged category, arguably manufacturing is the better but smaller piece of the economy and philly fed will give us more clues in that regard. one other thing we want to pay attention to, the steepness of the yield curve, post yesterday's minutes, still hovering near record territory. back to you. >> thank you, rick santelli, a quick check on the markets as we get under way. even though the futures were pointing to a lower open the dow is up 10, almost 11. nasdaq is just barely in negative territory and the s&p is clinging to a small gain so the future is kind of misleading us this morning. doesn't happen often but once in
a while it does. your cnbc edge now. with the chief operating officer with vertex fund and mark matson founder and ceo of matson money. mark, what shall we buy or sell? >> i think you should be celebrating the fact that we are in the middle of the greatest wealth creation engine in the world right here right now. i don't want people to be afraid of equities long term. i don't want to have them make the same mistake they always do, wait until it's all at new highs before they invest. get into equities. be long term. equities are amazing long term so don't try to time it short term. >> larry? >> i don't understand -- mark -- >> once i realized that wasn't a chocolate candy. >> it's one ounce and if you saw the report yesterday, this is where the money should be placed, right? this isn't going anywhere versus the dollar where we look and see -- >> let me hold it up. >> that's our u.s. dollar right
there -- come on, erin. >> this is a kruger rand, everybody, south african, one ounce of pure gold. >> i'll trade his top five stock picks for one ounce of that right there. >> look, owning km commodities whether gold or any other commodity, high volatility, just a speculation deal here, and we won't speculate with our clients' money. >> i saw the comb x reports yesterday. i saw the imf dipped on a knee jerk reaction but now gold is back up. 1169 trending up for two consecutive years. the dollar is risky at best. and might as well pick it up in the federal reserve because you can buy it and shred it or it comes complete. >> diversify risk by diversifying globally. emerging markets in our portfolio. we don't speculate on individual commodities. it has a standard deviation of about 20%. historically only bat 4% rate of return. if you're going to gamble go with gold. if you want to invest do something else. >> i think gold is long term. let's talk a little bit about
gambling because you can maybe buy direct in the financials because you can get a big mac or a happy meal for, you know, more than the cost to buy a share of citi bank so you going to recommend b of a and citi bank and trend up with financials or do you want real estate. >> as a matter of fact one of the best ways to diversify your portfolio is have high book-to-market value stocks, equities with a lot of market value, small price out in the market right now. they have a premium of 3% or 4% long term and, yeah, we're relatively high in financials and consumer goods right now versus the s&p. >> i would run for the hills, focus on the staples like kraft and p & g, places you know will be here tomorrow. we need toothpaste and soap and deternlg enlt. we don't need long-term risky investments. >> you think you'd rather eat a big mac and eat it today than one share of citi? >> in a new york minute. of course i'd rath ver have a krugerand. >> how should the average retail investor participate in the gold market? >> not just gold, mark. silver, platinum.
>> let's talk about -- let's focus in on gold. there are a lot of different ways to play that market with etfs and futures and things and the actual bullion. what do you recommend? >> i like the actual bullion if i can touch it, see it, feel it. i wouldn't shy away from the 1100 dollar -- >> gold is 1118 an ounce this morning and i bet i couldn't touch this for less than $1300. >> if you can get a discount, look at a trend and buy futures or comex you can't go wrong. we see gold going back to 800 or 900 in the next two years. let's be realistic. i would pay a little premium to sleep nights rather than shoving dollar bills into my pillow. i just don't see the dollar as a bet or the euro or any international currencies. >> if i were an international smuggler -- >> what's wrong with the currency backed by 12 socialist governments? >> i love how mark still seems to think his government is different than yours. >> i think mark won. we're going to start doing that. we're going to start declaring
winners. >> really? >> all i know is if i was -- >> just like wwf. >> doesn't have to have any relationship to reality. >> no. >> hold on, erin. when the bulls run up and i look bad and i'm the bear it's terrible but we didn't even get into the jobless unemployment rate that i had to talk about or even the deficit. what about the u.s. deficit? >> we'll save it for the next fight. our producer now will murder us. >> straight ahead -- what's not good for walmart going to be good for the economy? same store sales are down. is that because consumers are finally starting to trade back up? >> later a british think tank finding cutting the work week to 21 hours could boost the economy. you don't get paid though. >> don't the french do that? it was a disaster. >> i don't think they ever cut it or increased it. >> yeah. the french had a law you couldn't work more than 35 hours. it was a nightmare. >> for everybody but french workers. >> unemployment skyrocketed
because nobody would hire. >> so yes or no. ten of those things and you get $10,000 in or out of a country. you don't have to declare. that's pretty good. they'll think it's chocolate. hi, ellen! hi, ellen! hi, ellen! hi, ellen! we're going on a field trip to china! wow. [ chuckles ] when i was a kid, we -- we would just go to the -- the farm. [ cow moos ] [ laughter ] no, seriously, where are you guys going? ni hao! ni hao! ni hao! ni hao!
welcome back to "squawk on the street." walmart shares down almost 2% last i checked after reporting 22% profit growth that beat expectations but a 4.5% sales growth to 12.8 billion which missed same store sales down 1.6% and the company offered current quarter guidance of 81 to 85 cents a share, a little soft. could mean consumers are trading up. could also mean they are buying the same amount at walmart but at really, really low prices on things like food. >> we expect first quarter sales in the u.s. will be difficult as we cycle through strong year over year comparisons and deflation. we remain very focused on growing top line sales and we believe we will see more improvement as the year progresses. >> how does walmart rules relate to the economy? in the 2001 recession company net income growth slowed then accelerated sharply as the recession ended. now, in the current recession if
we're still in it which started at the end of december '07 same thing. slowing, even dipping before that income growth finally turned around in the october growth at 3% growth which has now accelerated to 22% growth. could argue that means we're coming out of the downturn though that may not be good for the stock. in the '01 recession, shares rose 15%. in between recessions, they fell 8%. since the latest recession started, they are up 18%, though, erin, that's going to change today if the stock performance continues. back to you. >> jane, please don't go anywhere. we want to talk about walmart a little more given its importance as the largest private employer in the nation. let's bring in a retail analyst at ubs. has a buy rating on the stock. some optimists are trying to spin walmart this way. yes it's a little weaker than people thought but maybe that's a sign that american consumers are trading up and that people who had gone to walmart because they were forced to are now moving back up the income
ladder. what do you say to that? any merit? >> there may be some merit to that. i think it's unclear because this time last year walmart was doing so very well so they've got much more difficult comparisons compared to most companies. i was surprised at the extent of the declining but i think as unemployment has been peaking recently i think it's hit that walmart shopper harder than most retailers. on top of that you've got deflation in consumer electronics and food. it looks like the sales improved through the quarter. the comparisons get easier especially in the second quarter of the year. we should have positive comps back again by the second quarter and combine that with the fantastic level, i think this could be a good stock. >> are you seeing in the rest of the retail universe you focus on any other signs of strength at the higher end, department stores or anything like that or no? >> oh, yeah. we've seen that a lot. i mean, we're seeing same store sales increase at some of the higher end names but what i
think also you might be seeing in the walmart shopper is the impact of gas prices which are way up compared to a year ago. if you fold in the gas bought at walmart, same store sales fell only 1.2%. the walmart shopper may be more sensitive to gasoline prices. >> is that the way you see it, neil? >> i think gas prices get more important as they get over $3. i think unemployment is the bigger factor right now and i don't think it's stopping people going to walmart but they may be buying less when they go. >> so what's the outlook? is this company going to do better in the future? should we buy the stock? what? >> i think you really should here. this is a good opportunity. this should be the low point in the comp cycle. the near term story is all about really big improvement in costs and cost leverage in the u.s. and internationally which is really catching up on the inventory cycle. but longer term we think the company has a massive opportunity in the u.s. to grow in urban markets and are developing smaller formats to do
that. we'll hear more about that we think over the next six months and this could reemerge as a growth story. >> they can add stores? >> they're smaller market experiments. in phoenix it's been paused. they opened four smaller stores trying to take on what tesco is doing with fresh and easy. the verdict is out on whether that's working. >> we expect something like market size but with a pharmacy counter and 20,000 square foot format. we think this is what they'll go to market with. there is an $80 billion to $100 billion opportunity in the top 50 markets if they can get this right. >> all right. thanks very much. jane, neil, appreciate it. >> thank you. okay. commodities corner time. today we're looking at gold. after rallying earlier this week the yellow metal has been settling back over the last two days, still well above $1100 an ounce. >> i think it's safe to say we may have seen some surge in some
of the ag futures because of the consumption on this desk. we can no longer show you because the bacon is now -- >> pretty much gone. a couple pieces left back there. >> woo. we ate a lot. for the first time in 17 months sirius xm radio is trading above a dollar. >> wow. >> mm-hmm. >> a whole buck. >> mm-hmm. that takes away the threat of a nasdaq delisting for now. >> yeah. but the threat of howard stern leaving is still in play. can this stock ever catch a real break? you've been clicking a lot on it with cnbc.com so we will click on it, too.
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hi folks. welcome back to "squawk on the street." matt nesto here. did you see o'reilly automotive down about 6.5% in early going. fourth quarter was strong but the forecast for the first quarter and full year is weak, having its worst one-day giveback in, well, a year. that is not good. goodyear tire is good. it is up for the fifth consecutive day. 4.5, almost 5% higher. the fourth quarter beat comfortably by a wide margin of
a 14-cent gain versus a nine-cent loss. the revenue is topping estimates there. hormel almost at an all time high. could get through. if it does there you go. 42.21. has to get up around 46.75. fourth quarter results beat by a mile and the revenues were there and they also raised the full-year guidance. we love that. mark, back to you. >> suddenly i crave spam. >> you crave spam? ♪ spam, spam, spam, spam sirius xm radio hitting new highs. the stock now trading above one dollar. one of the most searched stocks on cnbc.com. should investors take a serious look at the stock? david bank is managing director in global media and internet research with rbc capital markets. his business card is the size of an envelope to get all that on it. back at hq is our own david faber, a very small business card, simply says da brain.
brain, what's going on here? >> you know -- >> why is everyone so interested in sirius? >> there's always been a lot of interest in sirius. obviously they got a lot of subscribers, a lot of interest in howard stern, and we've seen a lot of interest on things like cnbc.com in terms of this stock. perhaps because it's a very low price stock. it's available for purchase in large amounts. or at least large share amounts, mark. but you forget david bank, this thing has got what, a $10 billion enterprise value. >> that's absolutely right. absolutely right. so like a 15 cent swing in the stock represents a turn so don't be fooled by the low dollar price. there's a lot of equity value, a lot of market cap here. >> what do we think, you know, when we look at the future? let's start with stern. is it a good thing if he leaves or a better thing if he stays? >> right. honestly, i think it's probably a win-win. if he leaves it's $100 million
of expenses that come off the income statement. if he stays, it's you know a preservation of a franchise. my guess is at the end of the day it'll be something in the middle. they'll probably pay him a little less and he'll probably work a little less. that's how i bet it comes out. >> what about the long term here? >> yes. >> obviously the stock has sprung above a buck a share as you point out, over $10 billion market value. >> right. >> threats from things like pandora. >> right. >> are those real or imagined? >> yeah. i think those are real threats. i mean, you know, pandora, i think -- >> what is pandora? >> pandora is a sort of a -- the leading online radio service. >> okay. >> so as we move closer to, you know, internet online reception in the car, these services become a real threat, you know, a real competitive force against sirius and they're free. so what i think is going on with the stock in a sense, while some of this is about fundamentals and we think their guidance is fairly conservative and the
street is fairly conservative, the stock was in jeopardy of being delisted, because if it traded below a dollar for a certain amount of time, they had a certain amount of time before they were either going to have to delist or reverse split the stock. what happens when you reverse split the stock? often the shorts come out. now it looks a lot less likely that they're going to reverse split the stock. yo this stock? >> you know, we think the stock is fairly valued. >> you think it's fairly valued. >> yeah. >> when around the corner they could have a competitor who gives away the service for free? >> around the corner, maybe around a couple corners. right? a couple corners. >> and then, mark, can they give it away for free, right? >> okay. >> subscriber gains. you know? and car sales are up, which obviously helps them as well. >> that's just one more thing in my car i won't know how to work anyway. >> yeah. >> all right. thank you, david faber. >> stick shift, clutch, regular,
welcome back to "squawk on the street." we have lots of important data. philly fed a very contemporary number. 17.6. now, that is definitely a much better number than the unrevised 15.2 of last month. and it's a bit better than expectations. it continues in a long string of numbers that have reflected a positive for manufacturing, which has obviously something to do with inventory building which will lead to the ultimate question will consumers consume? leading indicators up 0.3. now, it continues its string of up months but this one is about half of expectations. last month was revised from 1.1 to 1.2 so only a fraction of the look last month but still nonetheless a trend not the most top tier of data. the response in the marketplace on this? we've taken a little bit back it looks like from equities but keep in mind as you look at this euro versus the dollar chart, in the last half hour the euro has
really gotten much better against the dollar equities have also turned positive. back to you. >> thanks so much, rick santelli. mary was scribbling all that down as rick was going through. >> right. >> but rick is talking about what all this means for manufacturing and the consumer and that's a big part of your focus today. >> that's right. you know, it's interesting what we've seen. first of all the numbers for philly fed were a little better than expected so as rick mentioned that's a positive for manufacturing, something that we've seen. the l.e.i. was somewhat disappointing. i want to say this is the 7th or 8th month in a row we've seen an increase in the forecast for the next six months but it was a little weaker than expected so some concern there. he also mentioned the dollar which is something we've been watching. what we saw is earlier we had weakness in the markets and then we saw a turn-around, a reversal in the dollar which had been stronger after that economic data was reversed. and so a couple things happening there. it hit some resist tanls. it actually retouched the high again on friday. that was resistance. then additionally mark chandler told me some investors are focusing more on the jobless
data which suggests negative for the economy as opposed to the whole salvador prices which might be a positive for the dollar because higher inflation would lead to higher interest rates which is dollar positive. so that's what we're seeing there. we're watching the s&p 500 today, important levels because it's at 1099. 1100 is a major area of resistance for the s&p. right now we're just about at those levels so we'll see how it plays out, whether there is strength to drive through that level. >> watch that 1100 resist tanls. let's check in with bertha at the nasdaq. the nasdaq is higher. what are you focused on, bertha? >> we are just fractionally higher now but seeing weight coming from the chip names. nvidia, they actually beat, boost their outlook above estimates but there were some disappointment on the revenue numbers. some thought they'd book a billion dollars. they were shy of that. the stock getting punished. the worst performer in the nasd nasdaq. applied materials which also posted after the close, some concerns there some of the areas
like solar continue to be soft though they say the chip equipment folks who make d-ram and memory products are seeing some but you can see chip equipment falling lower. the winner is price line the best performer in the nasdaq 100 actually at a new one-year high. it's a very nice looking one-year chart and it says its growth is coming from international bookings outside of the u.s. those gross bookings up 70%. they see continued excellent progress in this quarter. software strong today and a couple of analysts' upgrades also citrix today starting at a neutral over at ubs after yesterday being given a sell rating. and hardware today also a strong point. of course dell is going to be reporting after the close, hp put in a good number. network appliance a couple downgrades. that will weigh a little bit on the sector. back to you mark and erin. >> thanks so much to bertha. looking up at the oil trade higher by 75 cents, north of $78 a barrel. let's check in with sharon at the new york, mark, as usual.
good morning. >> good morning. a lot of the traders here trying to figure out what happened in the last half hour in terms of extreme volatility we saw around 9:30. some are saying we saw a headline about a coup attempt in nigeria. it was in nyjer. that probably didn't have much to do with it. perhaps it was more of the technical trade we've been telling you about for every session. that's fueling a lot of the rallies breaking above the 50-day moving average above 77.5 and then moving above $78 a barrel. again staying above $78 a barrel would be key for the bulls here. as we go into this inventory report where anything can happen we are expecting to see an increase in crude supplies and in gasoline supplies, a decline in distallate fuel supplies but keep in mind the api data shows the supplies build in distallate supplies. we'll look at that as well. mark, a lot of what's going on here is just a trade. the heat to gas trade going through the technical levels in crude so we'll see how much the fundamental news really has to play in today's trade as well. over to you. >> all right. thank you.
hewlett-packard says pc sales are surging. good news for a number of lesser known tech companies which stand to benefit. here to play the tech ripple, scott kessler equity analyst with standard and poors and rob sanderson director of research with abr investment strategy. gentlemen, good morning. what we're trying to figure out here is good news for hewlett is also good news for whom? scott? >> well, mark, i think one company to reference is flextronnics the second largest electronic manufacturing services company in the world. hp is a major customer. so is dell. pc replacement cycle. economic recovery, attractive valuation. we like the stock here. >> rob? >> we like a lot of the components suppliers into the pc end markets, makers of hdvs, memory chips should do well, and the broad coms are well positioned for the boom in pc units. >> so the hewlett news in your
opinion is about the industry not company specific? >> well, it's a little bit of both. >> you have secular growth in pcs of the average pc is far older than it should be and it needs to be replaced, we think windows 7 is helping that process but hp -- >> why. >> hp is proving to be a great executor as well. >> why does my computer need to be replaced? >> well -- >> you're talking to the wrong guy on this one. >> a lot of computers out there are very, very old. >> so is mine. it works fine. it's got windows xp and it works fine. >> and that's great but a lot of corporate pcs are not working well. in fact, the average pc is now more than five to six years old at this point and in a lot of cases those computers start breaking down, requiring at least an update if not a replacement and that's one of the themes that we're focused on for this year, frankly. >> rob, simple question. when you break down the market for pcs how much is corporate and how much is personal? >> well, it's difficult to say.
what i would argue, though, is a lot more corporate than most people would assume. if you think it's, say, 2/3 of 75%, corporations with the economy strengthening we think that's going to provide a nice tailwind to all companies across the pc supply chain. >> okay. rob, do you agree that we're at a point where computers are so old for companies that they now must replace them or can they string it along another year or two? >> oh, bootstrap can be, you know, can continue for a while but i think it's important to note that the strength we're seeing in the pc food chain right now is consumer driven. they really haven't seen an enterprise cycle kick in and companies like hp and microsoft are saying it's a lot of, straight from the consumer with an expectation for this corporate refresh to maybe kick in in the second half of the year. so hp is seeing a lot of rfps and activity for preparation for a second half corporate refresh. >> all right, gentlemen. thank you. >> thanks a lot. >> scott kessler, rob sanderson. >> and we are at a moment, yes,
you will now be looking at a live picture of the white house. the president will be approaching that podium -- i am having trouble today. that podium in just a moment. he will be signing an executive order creating a budget commission aimed at reducing america's debt. when the president starts speaking we'll take you there live. the question is can this commission restore fiscal sanity or is it more waste out of washington? those are just some of the questions we'll ask budget director peter orszagh today on "street signs" and there are a lot of budget proposals out there. the president will propose one that would have teeth as opposed to one that would have to go into law -- that would have been congressional. the republicans would not vote for that. >> what happened was the republicans proposed it. >> yes but then they voted against it. >> then when the president said oh, that's a good idea, i'll go along with that, seven republicans suddenly turned around and opposed their own
bill. >> right. yes. but it is interesting that those same people are out there saying that therefore deficit reduction when they voted against the commission which would have the teeth to actually deal with the deficit. >> they didn't want, the way they explained it was they did not want to give teeth to a commission that might say, hey, you have to raise taxes. >> well, that was the other great irony. i know we're happy everybody but the great irony was the one big bipartisan thing this year was when the commission was being considered 97-0 the vote in the senate to exclude social security from being touched by the commission. there's bipartisanship for you, mark. >> well, the fact remains that unless you leave everything on the table, you never solve the problem. >> i know. >> you have to look at the whole pot. >> if it weren't so terribly depressing and horrible you would laugh. just ahead, i'll laugh anyway, our trip across route 50 continues. next stop a city -- well
actually we're going along route 50. if we were going across route 50u it would just, you know. >> a bunch of chickens going back and forth. >> exactly. next stop a city with a checkered past. not talking about their cabs. 18% unemployment, sky high crime rate. is washington's dysfunction crippling this city in need? >> near and dear to our heart, tyson, hormel, sara lee, heinz, food stocks trading near one-year highs. >> yum. >> quirky little thing that could have big implications for the market. and later a 21-hour work week? it's a radical idea that some say could boost the economy. >> i just realized that would be an increase in certain people's work week.
shrunk down. trust me. it's rallying back. sands and mgm depending on which metric, which region, which any number you want to look at there could be some disappointment but the market thumbs down on both stocks, both weak here today. mgm 21% per share loss -- 13 cent forecast. fairfax financial buying zenith national insurance? a worker's compensation insurer based in los angeles for the record fairfax is based in toronto. they've been doing business for a long time. big pop there. cash deal. love to see it. over to david faber for the very latest. there it is. in depth. >> i did see that deal. that was interesting. glad you did it. huge, big premium as you say. looking at another deal, trying to find my notes. i just write on the back of these different pieces of paper.
i'm very disorganized. i apologize. simon is sending a letter back to general growth. late yesterday saying come on, guys. we don't want to wait around. we're not going to sit here while you take another six months in bankruptcy court and try and figure everything out. go look at this potential suitor and that. we're here with our $10 billion bid, giving unsecured creditors par plus accrued interest. they want the deal. we're giving you nine bucks a share. take it, take it. that's what simon is saying. the offer is not open ended and moving quickly will prevent further market risk for general growth. we will not sign a standstill. no. we won't. the point they're trying to also make is there's a lot of leverage in your business. one way or the other, i made this point yesterday. you got $28 billion of debt, about $3 billion of equity. when all is said and done, 10% move down in the value wipes the
equity, starts to cut into the debt. 10% move up doubles the ek wilt. there are those who argue general growth and you can see it there trading well above the $9 price. will simon feel like it needs to raise? will it raise? it's possible. two things we're waiting for here. we are going to hear from the bankruptcy judge in the next week or so. in terms of extending exclusivity for the creditors. that's important. we're also waiting to hear earnings or lack thereof from general growth. we should get those let's call it in the next two weeks. those two things, probably not much beyond that going to play out here. westfield one of the mall operators someone said might be interested sort of indicated they're not. brookfield, however, some believe will osh is at least trying to work it here, seeing what they can get done as well. of course this is a unique situation in some ways given how much equity value is left
despite this bankruptcy. there are any number of situations out there where you need to play it through the debt. mgm the studio comes to mind as one but this is one even though it's bankrupt where the play is through the equity. simon properties letter, did we take a look, saying this is the only offer for general growth which provides a full cash recovery for unsecured creditors while reducing risk and providing potential upside, far superior to any third party proposal or stand alone plan that would come from your process. of course that's the key here, the process. will they get another six months from the bankruptcy judge as well? to help them try and continue in their opinion at least on the gcp side of course to create more shareholder value? all right, mark. tell me what is just ahead. will you, please? >> just ahead, three ways to play the economic recovery. plus how dysfunction in washington is paralyzing main street. the mayor of east st. louis on his city's 18% unemployment.
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>> let's listen to the president. >> when i took office america faced three closely linked challenges. one was a financial crisis brought on by reckless speculation that threatened to choke off all lending. this helped spark the deepest recession since the great depression from which we're still recovering. that recession in turn helped aggravate an already severe fiscal crisis brought on by years of bad habits in washington. now, the economic crisis required the government to make immediate emergency investments that added to our accumulated debt. critical investments that have helped to break the back of the recession and lay the groundwork for growth and job creation, but now with so many americans still out of work, the task of recovery is far from complete. so in the short term, we're going to be taking steps to encourage business, to create jobs that will continue to be my top priority.
still, there's no doubt that we'll have to also address the long-term quandary of a government that routinely and extravagantly spends more than it takes in. when i walked into the door of the white house our government was spending about 25% of gdp but taking in only about 16% of gdp. without action, the accumulated weight of that structural deficit of ever increasing debt will hobble our economy. it will cloud our future. it will saddle every child in america with an intolerable burden. this isn't news. since the budget surpluses at the end of the 1990s federal debt has exploded. the trajectory is clear and it is disturbing. but the politics of dealing with chronic deficits is fraught with hard choices. therefore it's trech russ to office holders in washington.
as a consequence nobody has been too eager to deal with it. that's where these two gentlemen come in. they are taking on the impossible. they're going to try to restore reason to the fiscal debate and come up with answers as cochairs of the new national commission on fiscal responsibility and reform. i'm asking them to produce clear recommendations on how to cover the costs of all federal programs by 2015 and to meaningfully improve our long-term fiscal picture. i have every confidence that they'll do that because nobody is better qualified than these two. alan simpson is a flinty, wyoming truth teller. you know, if you look in the dictionary it says flinty and then it's got simpson's picture. through nearly two decades in the united states senate, he earned a reputation for putting common sense and the people's welfare ahead of petty politics.
as the number two republican in the senate, he made the tough choices necessary to close deficits and he played an important role in bipartisan deficit reduction agreements. erskin bowles understands the importance of running money responsibly in the public sector where he served as president clinton's chief of staff. in that capacity he brokered the 1997 budget agreement with republicans that helped produce the first balanced budget in nearly 30 years. one is a good republican. the other is a good democrat. but above all, both are patriotic americans who are answering their country's call to free our future from the stranglehold of debt. the commission they'll lead was structured in such a way as to rise above partisanship. there's going to be 18 members. in addition to two cochairs, four others will be appointed by me. six will be appointed by republican leaders.
six by democratic leaders. their recommendations will require the approval of 14 of the commission's 18 members. and that ensures that any recommendation coming out of this effort and sent forward to congress has to be bipartisan in nature. this commission is pat earned on a bill i supported for a binding commission proposed by democratic senator kent conrad and republican senator judd gregg. their proposal failed recently in the senate but i hope congressional leaders in both parties can step away from the partisan bickering and join this effort to serve the national interests. as important as this commission is, our fiscal challenge is too great to be solved with any one step alone and we can't wait to act. that's why last week i signed into law the pay-go bill. it says simply the united states of america should pay as we go
and live within our means again just like responsible families and businesses do. this law is what helped get deficits under control in the 1990s and produced surpluses by the end of the decade. it was suspended in the last decade and during that period we saw deficits explode again. by reinstituting it we're taking an important step towards addressing the deficit problem in this decade and in decades to come. that's also why after taking steps to cut taxes and increase access to credit for small businesses to jump-start job creation this year, i've called for a three-year freeze on discretionary spending starting next year. this freeze won't affect medicare, medicaid, or social security spending. it won't affect national security spending including veterans benefits. but all other discretionary spending will be subject to this freeze. these are tough times and we can't keep spending like they're not. that's why we're seeking to reform our health insurance system, because if we don't,
soaring health care costs will eventually become the single largest driver of our federal deficits. reform legislation in the house and the senate would bring down deficits and i'm looking forward to meeting with members of both parties and both chambers next week to try to get this done. that's also why this year we're proposing a responsible budget that cuts what we don't need to pay for what we do. we've proposed budget reductions and terminations that would yield about $20 billion in savings. we're ending loop hoels and tax give aways for oil and gas companies and for the wealthiest 2% of americans. so taken together, these and other steps would provide more than $1 trillion in deficit reduction over the coming decade. that's more savings than any administration's budget in the past ten years. i know the issue of deficits has stirred debate and there are some on the left who believe this issue can be deferred. there are some on the right who won't enter into serious
discussions about deficits without preconditions, but those who preach fiscal discipline have to be willing to take the hard steps necessary to achieve it. and those who believe government has a responsibility to meet these urgent challenges have a great stake in bringing our deficits under control. because if we don't, we won't be able to meet our most basic obligations to one another. so america's fiscal problems won't be solved overnight. they've been growing for years. they're going to take time to wind down. but with the commission that i'm establishing today and the other steps we're pursuing, i believe we are finally putting america on the path towards fiscal reform and fiscal responsibility. now, i want to again thank alan and erskine for taking on what is a difficult and perhaps thankless task. i'm grateful to them for their willingness to sacrifice their time and their energy in this cause. i know that they're going to take up their work with a sense
of integrity and commitment that america's people deserve and america's future demands and i think part of the reason they're going to be effective is although one's a strong democrat and one's a strong republican, these are examples of people who put country first. and they know how to disagree without being disgreebl. and there's a sense of civility and a sense that there are moments where you set politics aside to do what's right. that's the kind of spirit that we need and i'm confident that the product that they put forward is going to be honest, it's going to be clear, it's going to give a path to both parties in terms of how we have to address these challenges. all right? thank you very much. >> you've been listening to the president speaking about the bipartisan deficit commission, also referring of course to the binding one which was rejected. he is signing the order right
now. it was rejected in the senate. you can see behind him the men who will be leading it as well as of course vice president joe biden underneath our white house bug. i've never noticed him sign so many times each with a different pen. i must be honest i don't know -- do we usually see this? >> there you go. >> and he is done. by the way, we will be talking about this commission in exactly what it can hope to accomplish and why we specifically need it with peter orsag the white house budget director this afternoon on "street signs" at 2:00 eastern. you'll see his first interview on cnbc. after this break main street will be reacting to the president and the fiscal crisis. that is next. we'll be back.
in the headlines at this hour 11 stocks in the s&p hitting new one-year highs, a fact which makes mark haines dance. >> you've got it. >> mgm mirage upbeat on an industrial recovery. they're saying they see an improvement in convention bookings in vegas i suppose and goodyear tire reporting an 8% increase in sales volume due to growing global demand. >> okay. let's check the markets. now i know nine points on the dow is nothing to get excited about but the futures reporting to a lower open, so it's a good thing that we are still hanging on to a small gain here although
the nasdaq has gone negative as has the s&p. internally how do we look? hey, dead even winners and losers. and on the nasdaq, probably a slight negative bias there. yeah, 400 more down than up. not a biggy. or is that 300? 370. okay. >> all right. we've been traveling across route 50 eeover the past few wes to find out what main street thinks of washington and wall street. today we go to east st. louis a city on the banks of the mississippi river with an unemployment rate around 18% and that as mark emphasizes is merely the reported rate. it's our next stop on the road to recovery. mayor parks we appreciate you taking the time. you just had a chance to listen to the president talking about this budget commission which is confusing and frustrating for many because it is not binding, because there doesn't appear to be the political will in washington.
in your town, do people, are people concerned or angry about the gridlock in washington? and do they care right now about the deficit issue? >> at this point people care about jobs. people care about the economy. people want to see more money flowing into the city and flowing into their homes so that they can better live and in terms of actually getting through the gridlock it's one of those situations that we say we elected president barack obama along with our congressmen and senators and look for them to get done what needs to get done for america. yes there is concern about the gridlock. most importantly there is concern about the need for jobs. >> and is there a perception that something is being done about it? do you think the new jobs bill we're hearing about is doing anything politically to help the president? >> i think the people feel as if there is a lot being done and i think that when the announcement gets out that you just made that the president was just speaking
of, having this bipartisan commission to create jobs and to create a better economy and to reduce the deficit, everyone will understand that, clearly, our president is moving very fast, very swiftly toward economic reform and making sure that individuals go to work. >> what would you say, though, is the number one issue on the minds of the people in your city? >> the number one issue is that people need to go to work. when you look at what actually is taking place -- >> it's jobs. jobs is the biggy. >> it's jobs. jobs. everyone wants to make sure that they're working, make sure their families can be fed. as you reported, we have an 18% reported unemployment at this point. i think that reported number is slightly lower than what actual unemployment happens to be in east st. louis. i think that individuals are -- >> i don't mean to be disrespectful, mr. mayor. has east st. louis ever enjoyed good times? i mean, it seems to me your city
has had some rough times for a long time. >> east st. louis was once an all american city. east st. louis had more jobs than we had people at one time. it was once said that if you needed a job all you need to do is go to east st. louis. so east st. louis has enjoyed not just good times. it has enjoyed great times. those great times were primarily in the 1940s, 19 oos and 1960s when we had all types of industries in the city. the thing we marvel at is how people in this community make it and continue to keep families fed and children going to college in spite of not having a óie good economy. we look forward to generating an economy here that is something that our citizens certainly ñr deserve. >> all right. well, thank you very much, mayor parks. we appreciate you taking the time. mayor parks fromst st. louis, illinois. >> thank you very much. okay. coming up, the peculiar timing of tiger woods' apology.
plus, work less and boost the economy? it's a radical idea that has people talking. if it helps lower the unemployment rate wow be willing to work less and take a pay cut? yes or no. mark, the question for you is the whole theory is 21 hours a week so would you be willing to work more for the same pay? >> i've been trying to do this all my life. >> what? >> work less. no. >> make more. >> well, in your case you would have to work more and make less. >> that doesn't sound like a good deal for the markster. >> this is not good. please vote. national car rental? that's my choice.
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call or go to tdameritrade.com. independence is the spirit that drives america's most successful investors. announcer: trade commission free for 30 days, plus, get $100 cash when you open an account. tiger woods will be breaking his silence tomorrow. we will be carrying that live along with i would imagine everybody else around the world. so why would tiger be doing this now? and is it the right public relations move? there's a lot of reasons why that's a questionable thing. let's bring in our all star golf panel. we have the leading analyst at the golf channel, also played with tiger woods, former pga player played with tiger twice.
mike walker senior editor of "golf" magazine and our senior business reporter from vancouver. mike walker, the big question appears to be here he is doing this at 11:00 a.m. eastern tomorrow and that of course is i guess in the midst of a golf tournament which is being sponsored by accenture which used to be a big sponsor of tiger's and dumped him. people are saying is he doing it to get accenture or how is this going to back fire? do you think he really thought about that? >> i don't. i think a lot of players do think that. i know ernie els has been critical. i think for him to suggest that he would do this to get back at accentu accenture, i just can't imagine he would be that childish about the situation. i also think he's not going against the broadcast. the broadcast starts at 2:00. i don't think it takes that much attention away. the tournment is a tournament for real golf fans, a great tournament but it's not as if he
did this during a masters or a major event. i don't think he intentionally is trying to hurt the tournament because of the way they treated him as a sponsor. i can't see that. >> what do you think, randall? >> mike makes a good point. the broadcast does come on at 2:00. his statement is scheduled for 11:00. now, you could argue that the mere fact that tiger woods is coming back and making this statement this week brings more excitement, brings more eyes, brings more attention to the game of golf and subsequently that would benefit the ax sen estuary match play. going all the way back to theorizing about his return it wasn't that long ago i was asked what from a pr standpoint would be a home run and i suggested that maybe he should come back and play the accenture match play and then sit and answer every single question. what he is in fact doing is the opposite. he's coming back and making a statement during the week and not allowing any questions. i think that's a swing and a miss. >> all right. so he's not following your advice so you hate him. >> no, not at all.
>> i'm pulling your leg. >> on the contrary. i think it's consistent with what tiger woods has always been about. he's always been about control. it's one thing that makes him a phenomenal golfer. it's the one thing that makes him a phenomenal athlete, that makes us all sit back and watch everything he does. have you to be selfish to be as good at what he does and the fact that he wants control is not a curveball to anybody. it is a black eye. >> let's get mike in here. mike, i was somewhat surprised. i'm not a big golf fan. i actually couldn't care less about tiger woods. so i was a little surprised when i picked up the papers this morning and almost all of the columnists are taking randall's tack. they are saying, this is not the right way to handle it. do you agree? >> i think it's just -- he wants to control things that he can't anymore. i think this sort of nonpress conference/press conference will add fuel to the fire. it's not going to keep the tabloids from wanting to know,
not going to keep the rest of the news media. to sort of pick a few pet reporters to bring him in and not let them ask questions and then play a nontournament, it's not going to work. >> darren? >> it's not going to work because people want to find out. we're talking about the timing of all this. at the end of the day it's a moot point. after three months what is tiger going to say? he going to say enough? given the fact he is initially restricted who is going to hear it and be in the room and can't give you any questions, people think he is not going to tell us enough. then at what point is he going to tell us enough? is that now going to take us to the next tournament he plays in and does that make it even more of a frenzy? people might be a little surprised that he wasn't able to say just give me all the questions. let's get this over with. it's pretty clear that it's not going to be over with after this announcement tomorrow. >> let me just advocate in favor
of how he's handling it. he makes his statement. and then he does a big interview with somebody where he takes questions and he answers them as opposed to having people shout them from an audience. i mean, i can understand why he wouldn't want to do it that way. i think a lot of other people could, too. >> at some point he has to have that jay leno/hugh grant moment. sort of what were you thinking? >> he could do that with a one-on-one interview with a person of his choosing. >> oprah. >> probably should be a woman. as oppose today a hed to have af people screaming at you. >> it doesn't take a genius to guess what questions he would be asked. he can guess the first five questio questions. anybody could guess at those questions. and then make a statement that would answer those questions. he knows what he is obligated to do when he shows up tomorrow. he's a smart guy. i'm sure he has a lot of smart people around him. people would argue the fact that he's doing this is evidence to the contrary but he knows what
is expected of him friday. >> okay. >> on the other side perhaps he needs to make this statement on friday because he intends to commit to next week's golf tournament. the waste management open. >> they're saying there is a reason for the timing here. so maybe we have to go with that. >> that would be shocking for him to come back in phoenix. i mean, he -- >> thank you very much. >> got to go, guys. >> thanks a lot. >> thank you. >> it just seems to me, erin, a slam dunk. you know exactly how this is going to play out. >> right. >> he's criticized for not taking questions and to some degree i agree with that criticism but i also see your point that you can't just let any bozo -- someone could ask a really tasteless -- >> and there will be. >> unfair question. >> right. >> but it seems to me he doesn't win this way because you know as soon as he's done people are going to say oh, it was prepared by his lawyers or he was reading and therefore it wasn't genuine. he can't win here. >> maybe he does this and then he does an interview. i don't know. >> he can't win. >> straight ahead a radical idea
that has people talking. the 21-hour work week. everybody took 21 hours. okay? and you only got paid for that so yes if you work more it means you take a pay cut. >> you expect me to work all those extra hours? not going to happen. >> haines' hours wog up by six hours a week. >> but first, melissa? >> i'm not sure you're supposed to let the audience in on that, mark. at the top of the hour, the big debate among economists. is inflation or deflation the biggest risk to the economy? it used to be said that what is good for gm is good for the country on a day walmart releases its earnings we're asking is what's good for walmart good for the country? in our cutler report today, president obama appoints a commission to deal with the ballooning budget. we'll ask do budget deficits even matter anymore? lots ahead only on "the call" at the top the hour. "squawk on the street" is back right after this break. aflaaac! our little friend here has spent ten years trying to get your attention.
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>> michael pipto, senior market strategist with delta global advisers. joe lavorgna, deutsche bank chief u.s. economist as well as the cnbc contributor and our own simon hobbs who knows a thing or two about how much they work in the british isles. didn't they the french already try it? >> this particular keynesian think tank is going to tank the economy and the markets if we try it here or over in britain. you know, the government is already telling us that we need green jobs. out in government is going to tell us how long we have to work at these green jobs, but the government has no earthly idea what color jobs we need or how long we should work at them, the market does and let me give you one particular problem with this proposal. if the employer has to pay benefits, health care and vacations, for now more workers, how is he going to afford that?
the economy tanks and it tanks. it has everything -- >> yeah. yeah. obviously, it's a very silly idea. not just that they say to actually share out the work, but in order to ensure that people will be able to grow their own food, make their own clothes and take greater part in neighborhood activities. as you said, we tried -- the french tried this. it was the worst legacy of socialism that we had in this country coming into the millennium. they imposed a 35-hour week and the argument was that if you worked 10% less everybody, then we will be able to cut into unemployment. it had the exact opposite effect because it raised the cost of having employees and it walked out the door and there was nothing the employer could do. it was terrible inside or outside of thing and they were much better off, thank you very much. those that were outside work unlike the youth of france.
they were in a terrible situation. unemployment rocketed. nicholas sarkozy repealed that as you'll be well aware for the 35-hour week as a requirement two years ago. >> simon, i for one, think you did a marvelous job knitting that shirt you're wearing. >> joe, what do you think of this thing. >> i agree with everybody. i think it's patently absurd. in the u.s. you have the problem of too little full employment and too many people working part-time that want full time work and it will add an extra layer of regulation. that's not how you create jobs to bring in the tax base and it will have the exact opposite effect and it's bad policy and bad economics. >> then there's the people like mark who would feel completely and utterly punished. >> it would be less time in your garden. >> it would be less time in mark's garden. >> where i do raise my own food. >> the chinese are chuckling and they're dying for us to try this in britain. >> i can raise a more controversial note? unemployment is all about supply
and demand and we talk about the need to come back and employees to start rehiring. the flip side on that is supply and whether or not wages should actually be cut in the present environment real wages after inflation and there's a real interesting debate which i'm sure you're aware of which we should still cut more inflation in, for example, america in order that wages could be restrained below that rate of inflation. >> simon, simon -- >> i can weigh in on something? >> inflation has nothing to do with wages. >> aaron, here's what i want to say, if you look at the nfib which is the survey of small businesses because everybody pretty much believes that small businesses are sort of the engine of hiring and if you add government regulation and taxes together as one component, that actually trumps poor sales as if primary concern of the outlook. if you had more layers of regulation, you get more or less than what you want and that is more working. >> nobody sees merit to this.
this senseless -- working for less money and then everybody has a job and they buy a little bit and they're at walmart. >> it's a stupid idea. >> where is the representative first economics foundation? we should have her on the panel. >> i don't know, that's why i was trying to make the argument to try to throw it out there since there's a lot of rain pouring down from these boxes. >> she's probably off planting tomato seeds. >> it's a lovely social utopia. it's just not going to happen, is it? >> i think it's very telling that the french did this and decided it didn't work. >> even the french. >> if even the french decided it doesn't work that tells you a lot. >> you would have the right to fire as a part of that. i don't know what this woman proposed. >> it didn't work in france and wouldn't work anywhere. >> gentlemen -- >> he has a bias because his hours go up six hours a week. >> that's right. i don't want anyone increasing my hours taking me out of the tomato patch.
>> thank you, everybody. >> yeah. now you'll laugh on the other side of your face when i bring my tomatoes for you to eat. >> will eat them all. >> there's still time for the street poll, see what you think of this ridiculous idea, would you be willing to work less and take a pay cut in order to boost the economy and improve unemployment?
>> look at shares of yahoo!, and microsoft. both have gotten clearance for their search alliance. trading higher and that's significant. still, they got a trade coverage for that. >> here comes today's street poll. can't wait to see what you thought. can you support a 21-hour workweek in order to do all those things? gee, three out of four of our viewers said no, are you crazy? one in four, however, said yeah. they'd do it. >> i would like to share an e-mail we got to the show. >> quickly. no time. >> once again, mark is much more important than the people being interviewed, let him work less. what is that? >> sounds like someone who doesn't have anything intelligent to say. >> absolutely nothing. i'm going to write back this
person and ban you. >> we'll see you tomorrow. welcome to "the call." i'm sharon epperson on the floor of the mercantile exchange where we see oil prices above $77 waiting for the inventory report from the energy department. we're seeing a build of 3.1 million barrel for crude supplies. crude supplies up by 3.1 million barrels and gasoline supplies up by 1.7 million barrels and distillate fuel supplies down by 2.9 million barrels and that seems in line with expectations expecting to see a build in crude in gasoline supplies and we did see that surprise build in the api data yesterday. i am joined by mike niecefeld who is an independent trader and mike, often you say, though, don't pay attention to these numbers because what oil prices are trading on right now have nothing to do with